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List Of Credit Card Foreign Currency Transaction Fees

Published 3/8/08 (Modified 6/24/11)
By MoneyBlueBook

Not too long ago I went on vacation in East Asia. While I was there I had the fortune to be accompanied by local friends who could spot me so I didn't need to convert my American dollars into local currency. However there were at least two occasions when I glanced upon several beautiful small wooden art pieces that I wanted to buy. While I had a few local currency bills on me, it wasn't enough to buy the slightly expensive art pieces. So I had to resort to what I ordinarily would do back home in the United States - pull out my trusty cash back credit card. Fortunately, I had the foresight prior to traveling to another country, to research and familiarize myself with credit card foreign currency exchange fees.

While foreign currency exchange fees are now generally listed and disclosed by credit card companies, card issuers rarely publicize these hidden charges, preferring to leave them in the fine print. While some complain that the majority of these interchange fees are not used to process the actual currency exchange, but rather used to fund credit card reward programs and other direct advertising campaigns, the real concern is the lack of education when it comes to incurring these fees. Frequently, consumers who use their credit cards overseas come home to the unwelcome surprise of costly fees on their billing statement.

The foreign currency transaction fee for credit card purchases is comprised of two parts - the fee percentage charged by the card payment network (such as Visa, Master Card, Discover, American Express) and the fee percentage added by the card issuer (such as Citibank, Chase, Bank of America). Visa and MasterCard impose a standard 1% fee on all foreign currency charges to cover the expense of converting your foreign currency purchases back into U.S. dollars. The fee is imposed on the card issuer, but the expense is usually passed onto the consumer. Banks and card issuers that issue Visa and Mastercard also tack on their own additional transaction fee to the total - usually another 2%.

American Express does not have an extra card issuer fee, but it does impose its own foreign currency conversion charge of 2%. Previously, Discover Card was the only major card payment network that levied no foreign purchase transaction fees, however they have now updated their policy and tacked on the nearly ubiquitous charges. But then I challenge you to find a place overseas that actually accepts Discover Card. I think those living abroad probably have never heard of Discover before, likely thinking it's some off shoot of Visa or Master Card.

Credit Card Issuers That Have No Foreign Currency Transaction Fees

Capital One credit card is one of two major issuers that charges no foreign currency transaction fee for credit card purchases made abroad. While Visa and Mastercard still levy fees on Capital One - the card issuer has made the conscientious decision to waive the fees as a cost of attracting customers. Thus it looks like your best foreign purchase bet would be to apply for a Capital One Visa Or Mastercard to avoid the expensive and cumulative currency exchange transaction fees. I personally have the Capital One No Hassle Miles Card, which I use to earn 1.25 miles on each dollar spent, good for any airline with no seating restrictions, mileage cap, or expiration date on miles earned.

Today, most of these foreign transaction fees are laid out in more readable form on your monthly credit card statement. Sometimes they are denoted by a simple asterisk indicating the fee percentage that was levied, while some card issuers will list the actual dollar amount of the transaction fee portion. The transaction fees I've provided below include the total combined charges imposed by both the card issuer and the card payment network. Pay attention to some of the hidden special offers out there, especially the ones from more obscure credit unions and brokerage/banks.

Credit Card Issuer/Offer

Fee For Foreign Currency Transactions

Capital One

0%

Affinity Federal Credit Union

1%

NASA Federal Credit Union

1%

SunTrust Bank

1%

Discover Card

2% - Not Generally Accepted Overseas

U.S. Bank

2%

American Express

2.7% - Not Generally Accepted Overseas

Bank of America

3%

BB&T Bank

3%

Chase/Washington Mutual

3%

Citibank (Citi Card)

3%

HSBC

3%

TD Bank

3%

Wells Fargo

3%

Reminder Before Using Your Credit Card To Make Foreign Purchases

Modern credit card programs today implement sophisticated transaction software to detect fraudulent and unauthorized credit card activity. If your card has always been used in the New York tri-state region for example, but suddenly credit charges start streaming in from some place like Thailand or Indonesia, your card issuer may raise an eyebrow and start declining those international charges as part of their anti-fraud measures. A quick e-mail or phone call to your credit card company before you travel should prevent such an inconvenience from happening.

Credit Card Users Who Have Made Credit Purchases Abroad May Be Entitled To A Cash Settlement

If you made a foreign transaction using your Visa, Mastercard, or Diner's Club credit card at least once between February 1, 1996 and November 8, 2006, you may be entitled to claim money from a legal settlement. In response to an anti-trust class action lawsuit brought against Visa, Mastercard, and Diner's Club for alleged fraud and conspiracy to fix and conceal foreign currency transaction fees on credit card purchases to the detriment of card issuers and consumers, a legal settlement has been worked out. Under the settlement terms of In re Currency Conversion Fee Antitrust Litigation (MDL 1409), those who fall under the plaintiff class have three ways to participate and claim their settlement money.

While two of the options require that you gather your billing statements and receipts to verify the estimated value of your foreign credit card purchases, the simplest method for most is to file for the Easy Refund option, which is the route I personally took. As noted, this option is recommended if you traveled outside of the U.S. for less than one week or had foreign transactions of less than $2,500 using your eligible cards during the 1996 to 2006 period.

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The "discrepancy" is using that WSJ rate. The newspaper published rate is for interbank transactions of $1M of more. You will NEVER get that rate for your credit card transactions. The US Visa and MasterCard associations charge 1% fee to the banks for all forex transactions. In the old days, this was the only fee you saw, but as you know most large banks charge 2% to 3% after conversion into US dollars.

Also keep in mind that you'll get the rate as of the day the transaction is posted. If you return an item abroad, you will lose money as the rate is different for purchases than credits. Just like the buy and sell forex rates have spreads.

I had OK experiences with Capital One but I only use this card for overseas purchases.

A JCB card may also be a good option for you, particularly for travel to Japan. However, you must be a resident of CA, CT, HI, IL, NJ, NY, NV, OR, WA. www.jcbusa.com. They do not have a separate forex fee and their association upcharge is 1.1%. Discover card has an alliance with JCB similar to that of Union Pay. Currently JCB cards are accepted wherever Discover cards are accepted. Reciprocity is supposed to start by the end of 2008, but this has yet to be confirmed.

Jake says:November 4, 2008 at 4:59 pm

I live overseas. Capital 1 has no fees, but is the worst CC company I have used. Card # was stolen, and they can't seem to figure out how to mail me the replacment or send the mom-in-law stateside a card. Reps are foreign and don't do very well.
Use at your own risk

Elman says:December 1, 2008 at 5:09 pm

Capital One Canada charges a 2.5% foreign exchange conversion fee
I just applied online for one and I decided to read the disclosure agreement before I submitted my application and I saw 2.5% foreign exchange conversion fee for foreign transactions. Maybe US capital one is the only one that dont charge foreign exchange conversion fee

Sohail says:December 9, 2008 at 11:47 pm

Hi,
I think you blog needs a real update, banks are way ahead of you!
I made an online purchase on December 5th, 2008 from an online retailer(epharmacy) based in Australia using my citi bank Master Card. The actual purchase is US$ 16 but transaction fee is US$ 40.
I've no idea how to deal with issue. it is really messed up situation.

The Thrifty Expat says:December 10, 2008 at 3:02 am

Sohail, I would really recommend calling the number of the back of your credit card and finding out what that is about. I use my U.S. currency credit cards all over Central Europe and never have I even heard of such a ridiculous fee. At the very least you ought to easily be able to get them to waive the fee this one time.
Good Luck - I'd really like to see what Citi's response is. That's insane!

Oliver says:January 13, 2009 at 2:24 pm

Schwab has a cashback credit card with no foreign currency transaction fee(s)...you need to establish a Schwab broker account however (having said that there's no minimum and no fee on either the brokerage account or the cc, so maybe there's no downside).

Schwab Bank Invest First Visa Credit Card

The Thrifty Expat says:February 1, 2009 at 4:33 pm

I deal with the Foreign Currency Transaction Fee problem every day. Luckily there is another option for people who don't want to deal with Capital One, but who also don't want to deal with the fees - Charles Schwab Bank offers a Schwab Bank Invest First Visa Signature�� credit card. No transaction fees - plus 2% back to an investment account.

It's nice to have options.

Also - the foreign currency transaction fee on the Amex is higher than 2% (somewhere between 2.7% and 3%) and it's accepted widely here in Poland.

new2ecommerce says:February 4, 2009 at 6:01 pm

Hey,

One basic question about credit cards. Lets say I buy something at an online store for 100$/5000 Indian Rupees using a US based credit card. Paypal/Merchant's bank contacts the credit card company and the credit card company authorizes the payment. The item gets shipped. When would the amount be credited into the merchant's account? If that happens exactly at the time of purchase, the merchant would get 100$/5000Rs. But if that were to happen after 2days, and lets say the $ value drops to 48 Indian Rupees after 2 days. Then, will the credit card company just transfer 100$/4800Rs to the merchant's account or will it transfer 5000Rs? This might sound silly, but I had this doubt since some of my credit card transactions appear with a latter date on my statement. I have never used my US credit card for purchases in India, so I don't know how it works.

Pls clarify..

Irene Clark says:February 24, 2009 at 8:48 am

I have ordered prescribed medicine for years from Canadian pharmacies. Paid by Mastercard ( Citibank). No problem til about a couple months ago when "bam" I am charged for a foreign transaction. The Pharmacy is based in Houston, Tx, which buys from some place in New Zealand. They pay with US dollars. I contacted Mastercard & they give me a song & dance about my buying from foreign suppliers. I bought from a US based ( even tho they are Canadian ) company. I can't believe they can get away with this. I challenged them & my Pharmacy-but got the same answer-I doing a foreign transaction! I don't like it. If I buy a new TV-it was made in China or somewhere besides the USA-I dare you to buy very much that is not made in a foreign country. Should we be charged for that? I'm looking for a credit card company that does not make that charge. Any suggestions? I am an 84 yr old woman & feel like I'm being used & I shop with these people to save a buck!! Thanks!

Alex says:February 27, 2009 at 8:37 am

Just received a message from Discover Card. They are now tacking on 2% for foreign currency transactions.

All good things come to an end I guess.

Elwood Stetson says:February 28, 2009 at 8:53 am

Discover is now charging 2% for Foreign Purchases. I just got the notification. I am upset. It was the reason I changed to Discover!

Thrifty Expat says:February 28, 2009 at 3:38 pm

There is a new card in town - The Charles Schwab Bank Visa. It does not charge a Foreign Currency Transaction Fee and it gives you a flat 2% cash rebate on all purchases. I've been tracking the differences, and this seems like the best alternative.

Pat says:March 4, 2009 at 12:03 pm

Barclays Visa charges 3.00% on all foreign currency conversions. So listen up everyone, it's not on the list, but I have first hand knowledge!

ashoka kar says:March 10, 2009 at 11:08 pm

sir, i am a business citizen of india. i want a free lifetime credit card. please send me details.

Dan says:March 13, 2009 at 7:42 pm

I spend most of my time in France and have had good luck with Capitol One. Yes, there is the occasional transaction denial when the issuer's fraud software thinks it sniffs something funny. But other than that, it's been okay. And I collect cash-back rewards on all overseas purchases. As noted above, Discover isn't accepted much in Europe and now also see currency conversion as a revenue generator. so Capital One is the only U.S. card to turn to, although I'll check out the Schwab card.
What I would really like to avoid are wire-transfer fees and unfavorable foreign exchange rates from my greedy American bank when I wire money from my U.S. account to my overseas account. The unfavorable foreign exchange costs me 4-5% of the transfer. Any one have any ideas?

The Thrifty Expat says:March 14, 2009 at 1:41 am

Dan the way I get around the fees is pretty arcane, but it works. I live in Poland and when I need to deposit money into my Polish Bank Account, I'll go to the ATM in my Polish Bank - make a withdrawal from my US Bank in local currency, and then walk over to the counter to make a deposit in local currency to my Polish Bank account.

My US Bank charged 1 1/2 percent for the foreign currency fee, but gives a very fair exchange rate.

It's not the most convenient and it is a little time consuming, but I avoid larger fees. My bank will also raise my ATM-limit substantially if I call them prior to the transaction, so I've never had an issue of not being able to withdraw enough cash.

If you click on my site, to the right there's a link for credit cards where I've had several entries about Capital One and The Charles Schwab Card - You might find some of the older posts helpful.

cecily says:March 16, 2009 at 11:02 pm

updates - the cash settlement for visa is over and I spent a month in England for summer 2008 and I was able to use my amex quite a bit

cjalsj says:March 23, 2009 at 6:37 pm

Discover will charge foreign currency fee starting 6/1/2009

Beth says:March 26, 2009 at 9:54 am

Just a note of caution when using Capital One. Be aware that the conversion fee that they use is the one for the posting date, not the transaction date (even though I had 4 capital one reps tell me the opposite) . I recently made a purchase and it was posted to my account 2 weeks later. In this economy with the changing conversion rates, it ended up costing me 12% more than I was expecting, as I was looking at the conversion rate the day I made the transaction.

Billy says:March 27, 2009 at 2:49 am

One way to get around foreign transaction fees with a large amount of dollars is to use a cashier's check. I used this to take out thousands from wamu and place in my RBC accunt in Canada. This way, I saved over $120 to transfer over $3000 to pay for school. Othewise, writing a check directly to the school would cost me that much, plus the $120.

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This website may be compensated by companies mentioned through advertising, affiliate programs or otherwise.

Advertiser Disclosure: Many of the savings offers
appearing on this site are from advertisers from which this website receives compensation for being listed here.
This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all deposit accounts available.

Disclaimer: Because rates and offers from advertisers shown on this website change frequently, please visit referenced sites for current
information. This website may be compensated by companies mentioned through advertising, affiliate programs or otherwise.